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The FTSE 100’s Santa rally came to an end after six days in a row of gains, leaving London’s leading index down 0.3% as traders secured their profits.
Lloyds is dragging the banks lower after an article in the Telegraph suggested that the government could offload its stake in the bailed out bank before 2014 is out. I think the decline in Lloyds share price is short sighted as decreased state ownership will be favourable in the long run. The government’s shareholding is providing a floor and, more importantly, a cap to the share price.
Meanwhile, mineral extractors are bucking the downwards trend as the Chinese central bank dispelled doubts of a brewing credit crisis. Easy access to cash is sure to keep the Asian tiger roaring.
Social media stocks
Social media stocks have taken a severe tumble today with LinkedIn, Yelp and Facebook all experiencing some pressure. However, Twitter investors are particularly feeling the pain. Since the IPO, we've watched stocks go somewhat parabolic. The share price almost doubled, then capped at $75, followed by a punishing sell-off from those record highs. Prices fell by 14.6% in a matter of days to below $64 per share. Today has seen the stock fall a further 7% as analysts and investors question the company valuation in light of the fact that the social media company is not expected to earn a profit this year or even next.
Looking to the wider market, US equities lost their winning streak on Friday, finishing down 0.01% on Friday. Nonetheless, it’s likely the market will finish 2013 on a high note. We are currently expecting the Dow to open 10 points higher at 16,488.
Investors lose confidence in precious metals
It’s a bad day for bullion; gold and silver are off 0.8% and 2% respectively. Tapering by the Fed and a decline in commodity ETFS has ensured both metals are on track to register painful annual losses.
Dollar affected by concerns over US debt ceiling
The greenback isn’t cutting the mustard with traders. The looming US debt ceiling negotiations in the New Year are keeping the currency under the cosh.